Cloud computing is an incredibly important technology to most businesses because it allows them to store data online, host their website, or even develop games and mobile applications. The cloud industry is dominated by three main providers: Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud.

Each of those platforms is backed by its trillion-dollar parent company. DigitalOcean, however, is a rapidly growing, stand-alone cloud provider that's taking the fight to all of them. It focuses on providing cloud services exclusively to small and mid-sized businesses with under 500 employees. It differentiates itself from its competitors by offering cheap and transparent pricing, a simple platform with one-click deployment tools, and highly personalized service to help them get the most from their cloud experience.

The industry leaders are focused on attracting large enterprise customers, so they often won't go the extra mile for small businesses the way DigitalOcean does. Its platform now serves 614,000 customers, with 468,000 of them spending just $15 per month – in other words, DigitalOcean is a great on-ramp into the cloud for start-ups.

It relies on some of those small enterprises eventually becoming “scalers,” which grow significantly and deploy much larger budgets. DigitalOcean had 15,000 of those customers as of the first quarter of 2023 (ended March 31), and their average monthly spending was $1,962.

DigitalOcean generated $165.1 million in revenue during Q1, an increase of 30% YoY. By comparison, AWS grew its revenue by 16%, Azure by 27%, and Google Cloud by 28%, so DigitalOcean had them all beat.

The company estimates its addressable market will be worth $98 billion in 2023 and that it could double to $195 billion by 2026. Judging by its current revenue, DigitalOcean has only scratched the surface of its opportunity so far, and since its stock trades down 67% from its all-time high amid the brutal sell-off in the tech sector last year, this might be a great opportunity for investors to buy in.